How to Make Money from the Black Friday Sales
We’ve been on the hunt for a list of things to buy. We’ve been cultivating our list for a few months now. Finally the time has arrived. It’s time to pull the trigger, get the bankcard out and go crazy.
Tomorrow it doth begin.
Tomorrow is the start of Black Friday sales.
**Cue the evil drum**
You might wonder what this has to do with investing. But have you ever stopped to realise that if you play the sales smart, you can save yourself some moolah that you can then invest.
You can get the best deals, and grow your wealth with the savings. Makes sense, right?
Good. So let’s get started…
Black Friday has become quite an annual event. For a long time we weren’t all that fussed by it. But this year we’ve caught Black Friday Fever. And we’re not sure we’ll ever recover.
You see your humble editor’s wife is having a baby in January. It’s our first. That means there’s a whole bunch of baby stuff we need to get in preparation.
We need to get (in no particular order)…a pram, cot, furniture for his room, clothing (it’s winter here so warm clothing), blankets, one of those Baby Bjorn things, car seat and isofix base.
That’s not the full list. But it’s a start.
As you’re aware this stuff doesn’t come cheap anymore. We’re not sure it was ever ‘cheap’. But we’re going to suggest when we were born our pram ‘system’ didn’t cost as much as they do today.
Probably because it was just a pram in the 80s. Not a bloody ‘system’.
Nonetheless using the pram as an example, we headed off a few weeks back to ‘test drive’ a few. After all if I’m going to drop a grand on a ‘travel system’ then I’m going to want to make sure the damn thing feels, looks and is as nice as its cost suggests.
Some of them were abhorrently expensive for the quality. Some were abhorrently ugly too. But we found the sweet spot. And the sales guy who helped us through the journey was a cracking fella.
Note: he did ask if we were an engineer at one point. He remarked, ‘the way you’re looking at these is like you work in an F1 team or something’. We wish.
We took that as a compliment anyway. But once we were done, we said ‘thanks mate’ we’ll now wait for the Black Friday sales.
You could see on his face we weren’t the first to make this comment. And that made me think about all this Black Friday mania.
We know why companies put on these sales events. Even with discounted products there’s still a profit margin for them.
So if you can manipulate sentiment to build hype, FOMO and excitement you can get a rush of purchasing in a short window.
You only need to look at the raging success of Singles Day that Alibaba puts on each year. This year, Alibaba pulled in US$25 billion in sales in 24 hours.
What’s just as crazy is there were 1.48 billion payments through Alipay and 90% of that was via mobile phone.
While we don’t anticipate Black Friday sales in Australia will reach anything like that in a day. Even globally we’re not expecting Amazon to pull in a single day number like that come Friday.
But we know across the board, Friday is going to be big for retailers. This is good for business, but it can be a minefield for consumers. So here’s our guide to help you navigate the Black Friday Fever with minimal losses.
Why do retailers have Black Friday sales?
There’s a long running assumption that in the lead up to Black Friday sales prices go up. The naïve suggest that companies just push their prices up gradually and then discount them back to the price they should be normally.
What a lot of people don’t understand is that companies don’t discount products to make a loss. That’s not the idea of a business. That’s not a good business model. And while some products can be sold at a loss, it’s because they know they’ll pick up profit somewhere else.
The idea behind these sales is really to find people buying things that they didn’t need in the first place. These are unexpected sales wins in a period typically that can be slow.
With Christmas a month away the average consumer isn’t all that prepared. They might typically use November to save, and then closer to Christmas go on the shopping spree.
That can leave November hanging a bit. And with Black Friday now an expected major sales event, that can leave the start of November really dry for retailers. You end up with people like us putting off purchases until the sales roll around.
For retailers this can be a headache and a godsend. They might forego a sale before Black Friday but pick it up, and more on the day itself.
However we think that with retail margins already on the squeeze, that’s going to change. We’re already seeing more ‘pre-Black Friday’ sales. And Amazon even has it as a whole week-long event now.
Soon we expect that some companies will just decide to not participate in Black Friday at all. They’ll end up with a ‘non-Black Friday’ month-long sales event. Good for the consumer again.
How can you make money from Black Friday sales?
But while the perils of managing cash flow in a retail business is one thing, the real question you have is, how do you make money from Black Friday sales?
Well it’s simple. You don’t buy into the hype. If you can approach Black Friday sales like you should approach investing, you can save money and then use that to invest and make money.
Take for instance my example early of the godforsaken expensive pram. We’d said to the retail shop we’d wait for the Black Friday sales. And we had all intent to. But a little further online research found the previous year model at half the price.
A little more research found out that there was virtually no difference whatsoever between the 2017 and 2018 model. Just a £400 increase. Now we know that even in Black Friday the 2018 model isn’t going to get a 50% discount.
Understanding the price of the goods you intend to buy before the sale helps to get an idea of how much a retailer can actually discount the item. At that point there’s no need to wait for the sale.
We bought the cheaper pram. That meant that our initial budget was now £400 lighter than before. Bonza! But will we go and spend £400 on a bunch of stuff we then didn’t need? Nope.
We bought some crypto instead so we couldn’t spend it on more Black Friday stuff. After all, at the moment crypto is also having a Black Friday Sale! Our view is that £400 we weren’t expecting to have, we should put into something we think has some long-term potential to make us some money.
And that’s how you make money from Black Friday sales. You keep a cool head. Act smart. Research what you need and deep dive around the web to find better deals, or similar products for less that do the exact same thing.
It takes a little time to do, but it’s worth it. And you might pick up $10, $50, $100 here or there that you were intending to spend, but now don’t have to.
With that money you don’t’ spend, save, invest, put it away to work for you. Do that over enough Black Fridays and long-term you might end up with enough to buy a ‘Black Friday house’.
Editor, Secret Crypto Network
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